Appellate Court Did De Novo Review On Most Issues.
In a fairly lengthy decision, the Fifth District basically reversed trial court determinations on fees and costs issues in Johnson v. Johnson, Case No. F073191 (5th Dist. Feb. 26, 2018) (unpublished), involving a dispute between siblings arising out of their real estate partnership where the partnership agreement stated the prevailing party was entitled to recover attorney’s fees “actually expended” if “litigation is instituted with respect to any matter regarding the covenants in this Agreement.” The lower court determined the sister was the prevailing party, awarding her costs and about $135,000 in attorney’s fees. Brother appealed, arguing he was the prevailing party because the jury awarded him $12,822 on a breach of contract claim despite the fact sister won a defense verdict on three tort claims submitted to the jury.
First, with respect to the costs award, brother was indeed the “prevailing party” under CCP § 1032 because he obtained a net monetary recovery such that sister was erroneously awarded costs and he was erroneously not awarded costs.
Second, on the question of attorney’s fees, the appellate court did agree that all the four causes of action submitted to the jury, both the tort and contract claims, were subject to fee recovery, but under CCP § 1021 rather than Civil Code § 1717. With this in mind, brother made a sufficient legal showing on appeal that he actually prevailed because he was awarded contractual damages by the jury and he achieved prelitigation objections with a financial benefit to him of over $300,000. So, a remand was in order to gauge if he did prevail given the reviewing court’s interpretation of the fees clause. (On this issue, the appellate court determined that “actually expended” meant amounts actually paid by the litigant.)
Finally, on the sanctions issue, the trial court did not provide the mandatory 21-day safe harbor notice required in its OSC order and did not issue as OSC describing the specific conduct to be potentially sanctioned with required specificity.
Brother did well to appeal, to say the least.